By Linus Garg
First publised on 2023-02-16 07:29:50
Air India has placed an order for a whopping 470 narrow-bodied and wide-bodied aircrafts from Airbus of France and Boeing of the US, the two frontline aircraft manufacturers in the world. The order is worth $85bn (with a built-in clause to increase its size) and is the largest such order, surpassing the deal which American Airlines had inked in 2011. With aircrafts slated to start arriving from end of 2023, Air India is poised to increase its aged fleet (115 aircrafts now) and become competitive. It will strongly challenge Indigo's position as the market leader in the next couple of years.
With the Indian aviation sector having shaken off the Covid blues and poised to grow handsomely (it grew 13.7% Y-o-Y in December 2023), and with the government's focus on developing infrastructure (India now has 147 airports, up from just 74 in 2015 and the government has already announced that many more will be built soon), the demand for air travel will grow exponentially and the requirement for aircrafts will continue to grow. Boeing has predicted that India will need more than 2000 aircrafts in the next 20 years.
It is against this backdrop that the jubilation in both the US and France must be seen. President Joe Biden has called the deal "historic" while the French President Emmanuel Macron termed it a "new success". Both these countries will benefit immensely from this deal. President Biden said it will support more than 1 million jobs in 44 states in the US. In these troubled economic times for the West, this is a huge thing.
India's growing economic clout (where it can place orders for such staggering amounts) must now be used by the government and companies to negotiate better deals, in terms of pricing, transfer of technology and Make in India. That would be the biggest benefit India and Indian companies can extract from such deals.